Building a house is an exciting journey, whether it’s your first home, a long-awaited upgrade, or a custom dream build. But while choosing floor plans and visiting display villages can be fun, the finance side of things can quickly derail progress if not handled properly.
The good news? Most home build finance mistakes are avoidable. With the right planning, support, and guidance from experts like Loan Gallery, you can move through the process with confidence, and fewer costly delays.
Here are the most common financial missteps we see, and how you can avoid them.
1. Not Getting Pre-Approval First
This is one of the biggest mistakes people make when building a house. Pre-approval gives you a clear picture of your borrowing capacity before you commit to buying land or signing a building contract.
Without it, you risk overcommitting financially or wasting time on plans that don’t align with what a lender will actually approve. Worse still, if finance falls through after signing, you could face penalties or delays in securing another lender.
Tip: Always secure pre-approval before putting pen to paper.
2. Underestimating the Total Cost of Building
It’s easy to look at the base price of a home and think you’ve got your budget covered. But the real cost of building often includes:
- Site costs (especially if the land is sloping or needs extra work)
- Council fees and permits
- Upgrades or variations
- Fencing, landscaping, driveways
- Interest during construction
- Lender fees or insurances
If you haven’t budgeted for these extras, it can create stress or delays later on when extra funds are needed and the bank needs to reassess your loan.
Tip: A fixed price House and Land package is a good option for those who would like certainty around the price of their build. With a fixed price package, the cost of both the land and the build is locked in from the start, so there are no unexpected costs or price hikes.
3. Choosing the Wrong Loan Type
Not all home loans are created equal, especially when you’re building. A construction loan is specifically designed to support the building process, releasing funds in stages as the build progresses.
Some people compare only interest rates without considering how the loan is structured, what redraw options exist, or how progress payments will be handled.
Tip: A mortgage broker who specialises in construction loans can guide you to the right loan product for your specific build.
4. Missing Paperwork or Delays in Documentation
Lenders can’t process your application, or make payments to your builder, without the right documents. This usually includes:
- Fixed price building contracts
- Detailed builder quotes
- Council-approved plans
- Personal ID and financial records
Even small delays in providing documents can slow settlement or progress payments to your builder.
Tip: Stay organised and responsive. Your broker can help manage what’s needed and when.
5. Taking on New Debt Midway
It’s tempting to grab that new car or upgrade your credit card during the build, but new debt can affect your borrowing capacity. In some cases, lenders will reassess your application, pause payments, or even withdraw approval if your financial situation changes.
Tip: Hold off on major purchases or new credit until the build and loan are finalised.
6. Ignoring Your Credit Score
Your credit score plays a big role in how lenders assess your home loan application. A low score can reduce your borrowing capacity or lead to stricter loan conditions.
It’s worth checking your credit history via a website like Experian before applying, especially if you’ve had missed payments or defaults in the past.
Tip: Pay bills on time, reduce unnecessary debts, and avoid multiple loan applications before building.
7. Trying to Do It All Alone
Some people go straight to their bank or try DIY loan applications using online tools. But building is complex, and construction loans are different from standard home loans.
A mortgage broker does more than compare rates, they guide you through the entire process, from lender selection to settlement and progress payments.
Tip: Save time, stress, and potential missteps by working with a mortgage broker like Loan Gallery who understands construction loans inside and out.
How Finance Mistakes Can Delay Your Build
When finance isn’t in order, it can cause a ripple effect:
- Land settlement can be delayed
- Builders may pause construction if bank payments aren’t made on time
- You may need to reapply or renegotiate terms, pushing out your timeline
Delays can lead to increased costs, the loss of builder discounts or promotional offers, contract penalties, and added stress. In some cases, your builder may need to reshuffle timelines or resources, meaning your project could be pushed back even further. All of this can turn what should be an exciting experience into a frustrating and drawn-out process.
How to Stay on Track
Here’s how to keep your build moving smoothly:
- Get pre-approval early – Know your budget and have finance ready before signing anything
- Work with an expert – A mortgage broker who specialises in home builds can spot issues before they arise
- Stay responsive – Timely paperwork helps avoid unnecessary hold-ups
- Plan for a buffer – Financially and emotionally, it’s good to expect a few surprises along the way
Why Work With Loan Gallery?
At Loan Gallery, we live and breathe construction loans and have helped thousands of Aussie buyers navigate the home build finance process with confidence.
We’re not just here to get you a loan, we’re here to make sure your finance doesn’t get in the way of your dream home.
From pre-approval to final drawdown, we’ll guide you every step of the way, avoiding common finance pitfalls and keeping your build on track.
Contact a Loan Gallery expert today to get started.
Please note:
Loan Gallery Finance Pty Ltd is independent of Simonds Homes and all advice is provided by Loan Gallery and not Simonds Homes.
The above advice is general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.
Loan Gallery Finance Pty Ltd ABN: 33 163 825 670 Australian Credit Licence: 475302
MFAA accredited business
